Brent crude oil prices rose again today, pushed by a weakened U.S. dollar and a tightened supply caused by outages in Canada and Nigeria.
However, the prospect of an increase in output following the increase in the rig count in the U.S. has capped gains.
“[While the rig count increase was] not enough to materially change the outlook for U.S. production, [figures suggest] rigs may be returning in the best acreage, namely the Permian Basin”, Morgan Stanley said in a statement.
Brent Crude Oil Price Up Again; Capped By US
While traders are blaming the rise on the decrease in the value of the U.S. dollar, this is also expect to lead to a rise in fuel demand in the rest of the world, as the price of oil imports traded in U.S. dollars will become more attractive to buyers.
The upsurge is also attributed to the continued militant attacks on oil infrastructure in Nigeria, despite ExxonMobil lifting a force majeure at Que Iboe last Friday and the Nigerian oil minister meeting with militants.
Together, the recent outages in Canada and Nigeria have taken more than three million barrels of crude per day out of the market.
Rise In Supply Threatens Oil Prices
The recent supply cuts have been met with an increase in production in the Middle East, namely by Iran, which is returning to the market quicker than expected since the end of the international sanctions.
However, with Iran nearing its maximum capacity, it is unlikely that the country will be able to compensate for further outages, Reuters reported.
Still, the U.S. continues to send signs of a renewed focus on production, with the recent addition of oil drilling rigs. According to a survey disclosed by Baker Hughes on Friday, active rig counts in the US rose by nine last week, the first increase in eleven weeks.